UPDATE 2-WestJet shares fall on forecast cut, CEO exit

Karan Nagarkatti

Published 10:40 AM ET Thu, 8 March 2018
Reuters

(Adds details on forecast, analyst comment, background and shares)

March 8 (Reuters) - WestJet Airlines Ltd cut its forecast for a revenue metric on Thursday and said Chief Executive Officer Gregg Saretsky was retiring, sending its shares down as much as 6.3 percent on Thursday.

Canada's second-largest carrier appointed Ed Sims as its new chief executive. An aviation industry veteran, Sims joined WestJet in May 2017 after serving as CEO of Airways, an air navigation service provider in New Zealand.

Saretsky was at WestJet's helm for eight years during which WestJet's stock rose 64 percent as he introduced regional airline WestJet Encore and some popular rewards programs.

However, WestJet has run into issues ahead of the launch of its ultra-low-cost-carrier (ULCC) Swoop after Canada's Air Line Pilots Association said the company was trying to bypass the union by luring its own pilots to fly for Swoop under different working conditions.

"The change in leadership continues to add to our concern around future execution of ULCC and widebody strategy," equity research firm Alta Corp analysts wrote in a note.

"We wonder if the relationship with the employee group could be a cause for the retirement of Mr. Saretsky."

WestJet said on Thursday it expects revenue per available seat mile (RASM) to increase by 2.5-3.5 percent for the current quarter, down from its previous forecast of 4.5-5.5 percent, due to harsh weather conditions.

WestJet's shares were down 4.8 percent on the Toronto Stock Exchange. (Reporting by Karan Nagarkatti in Bengaluru; Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty)